Question-and-Answer Session
Operator
(Operator Instructions) And our first question comes from Mark Parr - Keybanc Capital Markets.
Mark Parr - Keybanc Capital Markets
I guess the year could have ended worse, I think you guys relatively speaking did a pretty good job to end up the year, so congratulations on that.
Michael Goldberg
Thank you.
Mark Parr - Keybanc Capital Markets
I think you still doesn’t feel very good, so I am sure.
Michael Goldberg
What does?
Mark Parr - Keybanc Capital Markets
I had a couple of questions, one on the SG&A front, the reduction from the third quarter, could you give us some more color on the year-end adjustments and how much of that reduction that we saw is recurring on a go-forward basis?
Scott Stephens
Well, there was a couple of million dollars basically of favorable year-end adjustments. So excluding those, we still year-over-year in the fourth quarter, we are down about 4% Q4-to-Q4. So they weren’t terribly significant. We mentioned the headcount reductions and the workforce reductions given activity levels that were in excess of 8% by the end of last year and that are now in excess of 10%.
Mark Parr - Keybanc Capital Markets
So you have a sense for the run rate of SG&A for ?09?
Scott Stephens
Well, what Mike mentioned was at least a 15% or $45 million reduction is on track for 2009 at this point.
Mark Parr - Keybanc Capital Markets
Well, for SG&A?
Scott Stephens
SG&A.
Mark Parr - Keybanc Capital Markets
Well, that’s really good. Do you have any sense, you talk about the competitive environment and Mike, I was wondering if you could talk a little bit about the outlook for gross margins as well. And also, I’d also like to get a sense, your LIFO adjustments are subject to such tremendous volatility over the course of the year. Does the new ERP system imply that, we are going to see less volatility as far as LIFO impacts on quarterly earnings going forward?
Michael Goldberg
I’ll answer that. First question, now let’s go on to the second one. The market is obviously extremely competitive as the year is kind of unfolded. To-date, our margins have held up quite well. So, we are relatively pleased with our margins and we’d anticipate kind of margin levels kind of close to the average of last year. So we are seeing a recovery from the fourth quarter, but we know that this that the market is extremely competitive and there just really isn’t the volume of business out there for it not be so.
- To read the full transcript on Seeking Alpha, click here »
